Leadership

KB Home Posts Its 16th Sustainability Report, A Standard Setter

"First" weaves as a recurrent constant through the company's historical timeline, and it's no doubt that many if not all of KB Home's 2,300-plus team members awaken each day and show up for their day's work with a need to push in the direction of that "first" principle.

Leadership

KB Home Posts Its 16th Sustainability Report, A Standard Setter

"First" weaves as a recurrent constant through the company's historical timeline, and it's no doubt that many if not all of KB Home's 2,300-plus team members awaken each day and show up for their day's work with a need to push in the direction of that "first" principle.

May 11th, 2023
KB Home Posts Its 16th Sustainability Report, A Standard Setter
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Left to right: Jacob Atalla, VP-Sustainability Initiatives, Dan Bridleman, Senior VP, Sustainability Tech and Strategic Sourcing, and Jeffrey Mezger, Chairman, president, and chief executive officer, KB Home

When we do a "close-up-moment" story on any firm in the homebuilding and related businesses community, it's impossible to shake two questions one of the sector's living legends – Larry Webb – burned into our brains as ever relevant and telling.

(1) Who are you? (2) Who do you want to be?"

And when the firm we look closely at is KB Home, at least part of the answer to the question number one is this:

First."

And at least part of the answer to question number two is this:

Built on relationships."

Let's take them one at a time, although in fact they intertwine across time.

In many contexts being first confers bragging rights.

In KB Home's 65-plus year history, since it stood up as a business partnership – Eli Broad and Donald Kaufman – that would build slab homes that would make homeownership more affordable to first-time homebuyers, being first is less about a boast. It's more about who the company is, which is that it claims and promises its customers and stakeholders leadership in doing what it does.

"First" weaves as a recurrent constant through the company's historical timeline, and it's no doubt that many if not all of KB Home's 2,300-plus team members awaken each day and show up for their day's work with a need to push in the direction of that "first" principle.

  • 1967: First homebuilder to offer limited warranties on their homes
  • 1969: First homebuilder to be listed on the New York Stock Exchange
  • 1977: First homebuilder to reach the 100,000 home mark
  • 2008: First national homebuilder to publish an annual sustainability report
  • 2010: First national homebuilder to build EPA WaterSense-labeled homes
  • 2021: Achieves average HERS score of 49, the lowest published score in the industry, making the company the #1 energy-efficient national homebuilder
  • 2022: First national homebuilder to commit to EPA’s highest water-efficiency standards in drought-stricken Arizona, California and Nevada
  • 2022: Launches first all-electric, solar- and battery-powered, microgrid communities in California
  • 2023: First national homebuilder to break ground in the Metaverse with the launch of the first-ever virtual new-home community

That's just the "firsts" in KB Home's more than six decades of milestones. In all of these cases, being first was not simply about timing or some race across a finish line. Rather, it's been about commitment and investment, and standing for doing more for its customers in each successive timespan.

Which brings us to the second question, "who do you want to be?," at least part of whose answer is "built on relationships."

With each cohort of owners and would-be owners comes learning and discovery about what they value most as they pursue homeownership, and as they live in their homes and neighborhoods.

From that company history timeline, in 1967, Kaufman and Broad established a design and development department dedicated to researching homebuilding preferences.

In his introduction to KB Home's 16th consecutive annual Sustainability Report, KB Home chairman, president, and ceo Jeff Mezger notes:

Our company continues to be built on a customer-driven operational model designed to align our business with consumer demand, preferences and affordability. Our core product offering remains steadfast: a uniquely personalized, sustainable and attainable home. For over 65 years, that product has driven an enduring business, providing the place for more than 670,000 new homeowners to build their own lives and their communities of family, friends and neighbors."

What's especially striking about Mezger's overview of the KB Home reason for being is this: Who the organization is and what it wants to be as a resilient and enduring money-making value generator is – and has always been – one and the same as the goals of a much misunderstood label, ESG.

In fact, when KB Home was gathering its internal data and research to put together its first Sustainability report in 2008, very, very few people had even heard the term ESG.

The first group to coin the phrase ESG was the United Nations Environment Programme Initiative in the Freshfields Report in October 2005. According to Paul Clements-Hunt who was leading this work at the time, the initial view was that it should be called GES since they believed Governance was most the important area, followed by Environmental and Social. But it was decided that GES was “not so catchy, not so sexy”. Instead, they thought the E was “sexy” upfront, and that the S should go in the middle as it was most likely to be “flicked off the end by Milton Friedmanesque lobbyists”. And that’s how they decided upon ESG as the winning acronym. It was subsequently “concertised” into sustainable finance and responsible investment in the ECOSOC Chamber at UNHQ. Paul Clement-Hunts concludes: “We never could have imagined where it would end up.” – ESGAnalytics

Imagine, would you? Calling ESG the "sexier" combination?

Still, the point is, the label mattered less, while the bedrock pillars of good business matter more, or as KB Home's Mezger notes:

Operational resilience and adaptability in the face of change is fundamental to what it means to be a truly sustainable business, and these principles are at the heart of our environmental, social and governance commitments and practices."

Nowhere is KB Home action and investment more clearly and topically demonstrated than in its two most recent strategic forays to the vanguard of residential development, planning, and construction.

KB Home stepped forward and launched a first-of-its-kind microgrid community in California that represents a future model for residential energy independence and interdependence. Additionally, KB Home made an industry-leading commitment to water conservation for its new communities located in drought-impacted regions.

Mezger says of the Energy-Smart Connected – Microgrid – Communities in California's Inland Empire city of Menifee at Shadow Mountain.

Homes in these communities serve as decentralized energy resources that can act as part of a virtual power plant and create a self-reliant, energy-efficient neighborhood independently powered through solar + storage. The microgrid communities will serve as a working laboratory over the next five years to help explore and guide how the future may be powered."

Of the project, we wrote this a few months ago:

Three conditions serve as the bulwarks of transformation and spread across residential construction and real estate development.

  • Both the efficiency/resiliency and the attainability requirements of the project were non-negotiable.
  • Partnerships that fuse purpose that spans corporate, public sector, education and research sector in truly collaborative solutions are essential.
  • True validation and evidence of the innovative impact of these efforts comes not at the moment the investment and commitment becomes reality but only looking back in hindsight, when their regenerative value proves out over time.

Two constants involved in many of KB Home's established daisychain of homebuilding industry-first step-changes in energy and water efficiency, attainability, adaptability, resiliency, and home technology are Dan Bridleman, senior VP, Sustainability, Technology and Strategic Sourcing, and Jacob Attala, VP, Sustainability Initiatives. Dan and Jacob – and their team – have made those three conditions essential drivers of the business cultural imperatives Jeffrey Mezger, chairman, president, and CEO, lays out for KB Home to remain true to its core purpose, now in its seventh decade: making homeownership accessible to working households.

Our story of partnering at an epic level like this now goes back 15 or 20 years," Bridleman says of the weaving together of stakeholders – SunPower Corp. (NASDAQ: SPWR), University of California, Irvine (UCI), Schneider Electric, and Southern California Edison (SCE) – that underpin the strategy, research, technology, and energy capability the new homes and communities offer. "Having those foundational ambitions to impact energy use at both the home and community level, and do so in a way that makes our homes more attainable at the same time can only have come from working across all of these organizations together to make it happen.

Note: Dan Bridleman, Jacob Atalla and I will explore the initial "Lessons Learned and Future Vision" underlying the microgrid initiative during the upcoming PCBC Conference, May 24, in Anaheim. We'll unpack what it took to put together the linkages, set the baseline value propositions, the investment, and the ongoing learnings in the groundbreaking community.

When a company, deep in its DNA of action, culture, and investment, knows who it is and what it wants to be as a business and as a people, ESG is just a label. It's meaning and pillars, however, contain answers to those two eternally essential questions.

ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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